1984 (2) TMI 184 - AT - Income Tax

Tribunal rejects reference application on reassessment validity, citing no legal question from Supreme Court precedent.

The Tribunal dismissed the reference application regarding the validity of reassessment proceedings initiation, citing the absence of a legal question ... Referable question of law - reconsideration of draft statement before reference - valid initiation of reassessment proceedings - no question of law where issue is one of fact - statutory reference under section 256(1) of the IT Act, 1961 - precedent of CIT v. Lakhiram RamdasReconsideration of draft statement before reference - referable question of law - statutory reference under section 256(1) of the IT Act, 1961 - Tribunal's power to reconsider and finalise a draft statement of case prior to referring a question to the High Court - HELD THAT: - The Tribunal's interim act of preparing or ordering the finalisation of a draft statement of the case does not constitute a final expression of opinion that precludes reconsideration. Proceedings under s. 256(1) culminate only when the Tribunal draws up the statement and refers it to the High Court or, under sub-s. (2), refuses to state the case. Intermediary steps are tentative and are steps-in-aid to final disposal of the reference application. Consequently, where a final statement has not yet been drawn up or transmitted, the Tribunal remains open to entertain a request to reconsider whether the matter raised is a question of law or merely one of fact, and may revisit its earlier tentative view in that regard. [Paras 6]The Tribunal may reconsider the draft statement and the question whether a referable question of law arises before finally drawing up and transmitting the statement to the High Court.Valid initiation of reassessment proceedings - no question of law where issue is one of fact - precedent of CIT v. Lakhiram Ramdas - Whether the question suggested by the Revenue-relating to the validity of initiation of reassessment proceedings-constitutes a question of law warranting reference to the High Court - HELD THAT: - Applying the Supreme Court's decision in CIT v. Lakhiram Ramdas, the Tribunal found that the controversy over initiation of reassessment proceedings was essentially a question of fact (whether there was omission or failure to make a true return or disclosure) and not a question of law referable under s. 256(1). Reliance on the cited precedent and a congruent High Court decision led the Tribunal to conclude that no referable question of law arises from its order dated 29th January, 1982. On that basis the Tribunal declined to state the case to the High Court. [Paras 7, 8]Reference application dismissed; no question of law arises and the case is not stated to the High Court.Final Conclusion: The Tribunal may reopen and reconsider a draft statement before formally referring a question under s. 256(1), but on reconsideration it concluded-following CIT v. Lakhiram Ramdas-that the dispute over initiation of reassessment is factual and not a referable question of law; the reference application is therefore dismissed. Issues:1. Validity of reassessment proceedings initiation.Analysis:The judgment involves a reference application by the CIT, Bhopal to the Tribunal regarding the validity of reassessment proceedings initiation. The Tribunal acknowledged the dispute over legal principles and proceeded to draft a statement of the case for referral to the High Court. However, the assessee contended that no question of law arose based on a Supreme Court decision. The Tribunal considered arguments from both parties, with the assessee asserting that the suggested question was a question of fact. The Departmental Representative argued that a referable question of law existed. The Tribunal noted that the final statement had not been drawn up or referred to the High Court, allowing reconsideration of the matter. It cited the Gujarat High Court decision in support of this view, rejecting the Revenue's contention that reconsideration was not permissible at that stage.The Tribunal found support in the Supreme Court decision in CIT vs. Lakhiram Ramdas, where it was held that no question of law arose in a similar reassessment scenario. Drawing parallels, the Tribunal concluded that no question of law arose from its order of 29th Jan., 1982, and declined to state the case. The judgment was based on the principle that intermediary steps in a reference application are provisional until the final statement is prepared and referred to the High Court. As the final statement had not been drawn up, the Tribunal retained the authority to reconsider the matter, determining whether the question was one of law or fact. Ultimately, the reference application was dismissed, affirming the Tribunal's decision not to refer the case to the High Court.